Saudi Arabia, Russia reach oil output deal and urge others to keep promises

Saudi Aramco's Ras Tanura port. Saudi Arabia and Russia have agreed to extend the historic production cuts deal for at least one month. (Aramco)
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Updated 04 June 2020

Saudi Arabia, Russia reach oil output deal and urge others to keep promises

  • Big two OPEC+ producers will extend production cuts but want compliance from all members

DUBAI: Saudi Arabia and Russia have reached agreement on extending their oil output cuts and are taking a firm line with other producers to keep their pledges.

Ahead of a meeting of OPEC+, the two biggest producers in the alliance are telling others they must adhere to agreed production guidelines or risk a return to the market chaos of April, when some oil prices hit all-time lows.

An official at one Opec delegation told Arab News an agreement was in place between Saudi Arabia and Russia to extend the historic 9.7 million barrel cuts deal for at least one month, with a regularly monthly review— but it was contingent on all OPEC+ countries keeping their promises on current production levels.

“There is no dispute between Saudi Arabia and Russia on this,” the official said. “They are sticking by the rules, and they want to put pressure on to make all OPEC+ members do the same.”

Most other OPEC+ countries are believed to be willing to stick by the April cuts for an extended period. Nigeria and Iraq are considering the proposals for stronger compliance.

A “virtual” OPEC+ meeting could still go ahead at short notice, or could take place on June 9 as originally scheduled. Saudi Arabia has additional bargaining leverage in the 1 milion extra barrels it cut voluntarily, which could be reinstated at the end of this month 

Crude prices, which topped $40 a barrel for Brent this week partly on hopes that the cuts would be extended, reflected the late uncertainty, and slipped back to just over $39.

Oil experts do not expect the negotiations over compliance to derail a long term OPEC+ deal. “Compliance is always an issue, but all will want to avoid any instability,” said Robin Mills, chief executive of Qamar Energy consultancy. “It’s quite an achievement to get to $40 from where they were a few weeks ago.”


Saudi Arabia strengthens position as world’s largest Islamic finance market

Updated 2 min 50 sec ago

Saudi Arabia strengthens position as world’s largest Islamic finance market

  • Moody’s anticipates a shift to more Shariah-compliant finance over the next 12-18 months as corporates and households increasingly use Islamic products
  • VP-Senior Analyst at Moody’s Ashraf Madani: A comprehensive set of Islamic finance regulations have spurred Saudi banks to issue sukuk

LONDON: Islamic financing in Saudi Arabia will reach around 80 percent of system-wide loans in the next 12-18 months according to a report from Moody’s.
That compares to 78 percent of loans in the Kingdom in 2019 and 70 percent in 2013, the credit ratings agency said in a report on Tuesday.
Moody’s anticipates a shift to more Shariah-compliant finance over the next 12-18 months as corporates and households increasingly use Islamic products, even as low oil prices and the coronavirus crisis cause economic challenges.
Saudi Arabia had total Islamic finance assets of $339 billion as of March 2020, leaving Malaysia in a distant second  place with $145 billion.
“A comprehensive set of Islamic finance regulations have spurred Saudi banks to issue sukuk, Islamic products are now listed on the main market, and an Islamic mortgage refinancing businesshas been established,” said Ashraf Madani, VP-Senior Analyst at Moody’s.
The industry will further benefit from increased government sukuk issuance, potentially rising foreign investment supported by more lenient entry rules and deepening capital markets, Moody’s said.
A wave of mergers and acquisitions across the region is also accelerating the penetration of Islamic finance.